How can you give more to your heirs with less? For the sake of simplicity, let’s assume you have $300,000 in an IRA and appreciated stock worth $250,000. Assuming you are in the 45% estate estate tax bracket, you can see that your heirs actually benefit more from the lower valued gift of stock.

What if I’m not affected by the estate tax?

Under current tax law, if your entire estate is valued at less than $2,000,000, it will not be subject to federal estate tax. However, a distribution from your IRA to your heirs is still subject to income tax. Therefore, the gift of the $300,000 would result in a net, after-tax gift to your heirs of 201,000; whereas your heirs would receive the full $250,00 value of the appreciated securities with a stepped-up basis of $250,000.

PLEASE NOTE: This example is for illustrative purposes only and, like all the information on this website, is not intended as legal or tax advice. Consult your legal and tax advisors prior to making any material decisions based on this data.

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